Nearly a decade after the Venezuelan government expropriated its primary development property, Spokane-based Gold Reserve Inc. finally has reached a financial settlement with the South American government worth just over $1 billion.

Venezuela has agreed to pay a judicial award totaling nearly $777 million to Gold Reserve—including accrued interest—by the end of this year, Gold Reserve says. In addition, the country has agreed to buy Gold Reserve’s mining data for $240 million, and both parties have agreed to form a mixed company for mining what is called the Brisas Cristinas project.

Meanwhile, Gold Reserve has agreed to suspend all legal actions against Venezuela pending receipt of final payment from the country. 

“On behalf of the shareholders and stakeholders, we are very pleased to settle our dispute with Venezuela,” Gold Reserve president Doug Belanger says in a written press release.

“This settlement allows us to proceed with the tremendous opportunity for the company and Venezuela to jointly develop the Brisas Cristinas gold, copper deposit while providing Venezuela a great opportunity to attract new foreign direct investments due to the set of policies and regulations approved by the administration for the mining industry,” Belanger says.

Located in southeastern Venezuela, Brisas Cristinas is expected to be the largest gold mine in South America and one of the largest in the world, once it’s developed.

Gold Reserve is incorporated in Canada, but has its executive offices at 926 W. Sprague in downtown Spokane.

Gold Reserve says it invested $300 million into the Venezuelan project from the early 1990s to the time the project was expropriated in 2008 under the government of former socialist president Hugo Chavez.

Later in 2008, Gold Reserve sued the Venezuelan government for $2.3 billion, and the company secured an international judgment of more than $700 million against Venezuela in 2012.

Currently, however, Venezuela is reportedly on the verge of economic collapse and is experiencing widespread shortages in food, medicine, and electricity, say international media reports over the past year.

Home to the largest proven oil reserves in the world, the drop in global oil prices—as well as drought conditions—have dramatically reduced government revenues in Venezuela in the last two years.

Of the agreement, Belanger goes on to say, “This will be transformed into solid economic growth in Venezuela and the expansion of a new industry complementary to the republic’s existing oil industry.”

Venezuela will buy Gold Reserve’s technical mining data in four quarterly installments of $50 million beginning Oct. 31, with the final payment of $40 million due on or before Oct. 31, 2017, the press release says. After the final payment, Gold Reserve’s technical mining data will be transferred to the Venezuelan National Mining Database, it says.

Venezuela will use the proceeds from any financing it closes after executing the agreement to pay Gold Reserve before any of its other creditors. Gold Reserve can terminate the agreement if payments aren’t met within the agreed time frames, the press release says.

More than half—55 percent—of the mixed company will be owned by Venezuela and 45 percent by a wholly-owned subsidiary of Gold Reserve. However, Venezuela will receive 70 percent net profits when sales of gold exceed $1,600 per ounce, the press release says.

The agreement calls for a 40-year joint business venture between Gold Reserve and Venezuela. Venezuela will contribute the rights to the gold, copper, silver, and other strategic minerals, while Gold Reserve will provide the engineering, procurement, and construction services to the company, says the press release.

Gold Reserve will earn 5 percent for its technical assistance once commercial production begins. The mixed company will pay a net smelter return royalty to Venezuela of 5 percent for the first 10 years of commercial production, 6 percent of the next 10 years, and 7 percent thereafter, under the terms of the agreement.

Venezuela and Gold Reserve are working together to finance the anticipated $2.1 billion in capital costs to develop the Brisas Cristinas project.

“The mixed company will be authorized to maintain funds associated with future capital cost financings in U.S. dollar accounts,” the press release says.

The mixed company will be authorized to export and sell its concentrate containing gold, copper, silver, and other strategic minerals outside of Venezuela and to maintain proceeds from such sales in an offshore U.S. dollar account, it says.

In December, a U.S. District Court in Washington, D.C., ruled against Venezuela as it sought to dismiss Gold Reserve’s international judgment award of $740 million.